Here’s a radical idea for brokers to help real estate companies convert more prospects into deals. Like most of our ideas, real estate agents will probably hate it. Which means consumers are going to love it. Stop assigning leads to an agent because they are “next in line” on some imaginary roster. Or they happen to be sitting at a desk on “floor duty.” Instead, only assign leads to those agents whose actual past performance indicates they are best qualified to turn potential business into actual deals. Read more…
In a tough market, real estate companies need everyone to contribute their best efforts daily. Agents need to prospect, follow up on leads and ask for referrals. Marketing departments need to revamp websites, produce constant blog content and create company buzz on social networks. And what should managers do to contribute their best? Get out of their office!
In one of our recent management workshop, a group of managers and brokers were brainstorming ways to “make agents more productive.” It’s always instructive to hear this kind of language, as if agents were programmable robots who merely need a few new parts and software upgrades to be more efficient. The discussion turned to the usual solutions like training agents to use technology, encouraging them to purchase smartphones, mandating minimum photo and video features per listing and getting them involved on Facebook. All excellent ideas, but all missing one essential point.
Improvement isn’t spontaneous.
If it were, why would we need managers, coaches or trainers? Hardly any of us wakes up one day and “becomes” more productive. Olympians have trainers – really, managers – who show up with them every day. Yet even the best trainers will tell you that it’s not just the “training” during the class but the “implementation” after class that changes outcomes. George Washington led his men across the Deleware. He didn’t stay back in his tent.
Most of what agents and companies need to do to increase productivity isn’t rocket science. It has already been discovered, tested, proven and perfected: Prospect 50% of the time, focus on referrals and repeat business, and communicate with consumers the way they want to be contacted (such as text messaging or social media). In fact, most agents know these things.
It’s up to managers to help them do them.
What’s the best way managers can help agents do their job – whether it’s old-school or high-tech in style? The answer isn’t contests, cash-rewards or speeches. It’s not new technology or more marketing dollars. Any manager can tell you today that they have plenty of those things, but the needle isn’t moving.
Instead, managers need to do what they ask agents to do – if they want to change the outcomes at their companies. And that means one simple thing:
Get out of their office!
Managers need to be a daily – and constant – part of the production process. They need to be in the action, as it’s happening. This simply cannot be done from their corner office. And for the most part, it cannot be done in the physical office at all. But let’s not get ahead of ourselves. One step at a time.
Imagine what would happen if managers did not have back offices within the company. Where would they sit? Right next to the agents. What would they do? Listen, watch, learn – and be involved. That’s exactly where companies need managers to be: at the front of the action, a part of the process of creating and nurturing new business.
Managers without offices would change everything.
Suddenly, agents sitting around chewing-the-fat would be visible to the manager. And the manager would be visible to them. Not picking up the phone or sending out email marketing would not persist for long under the watchful gaze of the production manager. Within proximity of the action, managers would see and hear how customers were being handled by whoever is answer the phone. Good interactions could be praised; bad ones could be corrected, mentored, improved. Right away. Not at some future date.
Managers in the action could greet customers and learn critical market information. How did the customers choose their company? How were things going with their agent? Are they aware of the other services the company provides? Oh, and thank you for the business. Managers meeting customers would change everything.
But without an office, how would the manager do “their work”?
Just what work do you mean? Paperwork is not the work of management. It’s the work of an administrator. Managers read reports, learn from them, and adjust production by coaching their agents. Managers don’t write reports. So who needs an office to do that?
Managers don’t plan events. They don’t order trophies. They don’t go to wasteful meetings – inside or outside the company. Managers manage output from the production floor. And that cannot be done from the corner office, a meeting at the local Board or picking out a hotel for an event. Surely there’s someone else who can do that.
But there’s only one person who can manage.
Everything would change at a company where the managers sat next to the agents all day long. Morale would soar, as agents reconnected with their leader – and received consistent support, encouragement and advice from them as the action was happening. Interpersonal conflicts would be managed, as hearsay was replaced by first-hand observation. And the act of making or capturing new business would be managed. No paperwork could ever be more important than that.
Now consider the ultimate conclusion. What if the manager actually left the building? Not by themselves, of course, but with their agents. What if managers accompanied agents on listing appointments, showings and closings? That would really change everything. New agents learning the trade would have their manager by their side, mentoring and supporting them as they applied skills for the first time. Experienced agents could move to the next level of performance, as their mentor helped them refine their skills even further. Even Olympic trainers have to actually watch their students perform in order to point out their opportunities for improvement.
A manager accompanying an agent could debrief, correct and coach the agent’s performance within minutes of the action.
Managers out of the office would not only support an agent’s performance right away, but they would learn incredible amounts of valuable information from actual consumers – many of whom are never in the office. Managers at open houses could observe and interact with consumers and learn about their expectations, concerns, trends. They could identify which marketing approaches were effective. They would conduct a “higher order” assessment of consumers in actual sales situations – and take that information back to the rest of the office. When was the last time an agent debriefed the rest of the office on what they learned at a showing or an open house?
That’s the job of management.
Some managers do this and it’s why their companies consistently beat the market and produce successful careers for agents. In fact, companies with managers who aren’t in the office find they rarely have to recruit new agents. They are too busy making existing agents productive – by participating in the production process – that there’s little need to replace failing agents. Managers outside of the office see potential failure in advance – and can take action to avoid it. Retention becomes a non-issue as well, as agents realize they couldn’t possibly substitute a higher commission or new tech-tool for real-time management involvement.
For some companies, kicking managers out of their offices may be a radical idea. The corner office is long-seen as a reward for achieving a certain level in one’s career. Yet all too often the rise in a manager’s career coincides with a drop in the company’s performance. It’s easy to blame the market, the consumer, new technology or ill-trained agents: but it would all be self-deception. Companies have sold record numbers during recessions, without the opportunities of new technology, during times when agents weren’t even licensed. Time and time again, when we look at highly productive companies, we see the same formula at work. Hard working sales professionals who are led – daily, consistently, directly – by a manager who is on the front lines, in the middle of the action. Leadership cannot be done from the back office.
If you want to change everything at your company this year, lock the corner office door. And throw away the key!
There are two basic reasons why companies fail: unwillingness to embrace the obvious changes of their day, and a smug rejection of customer feedback. Those two factors can be found in every company that once commanded its market, then lost the leadership spot: Ford, Motorola and IBM. Each thought it “knew what was best” for the consumer. And each was taught quite quickly that the customer is always right. It’s a lesson being learned by other industry leaders today – such as Barnes and Noble, and some of the biggest real estate brokers in the country. We call it the “Failure Mindset.”
On Screen – a periodic “launch” of news, commentary, resources, bloggers and other information you can use to get your week started – from Matthew Ferrara & Company.
On Screen: Real Estate Industry news launch for February 9, 2010:
- The Wall Street Journal reports that Fannie and Freddie have already consumed more than $111 billion in taxpayer dollars. And they are likely to need more.
- A real estate bubble in Canada looks like it’s already inflated and expanding. Some markets are experiencing surges of 20% month-over-month, and it shows no signs of stopping.
- NAR Economist Lawrence Yun finally acknowledges that the tax credits are causing housing data to skew wildly every month in the latest release of pending sales figures from the National Association of REALTORS.
On Screen: Expert Advice from Industry Leaders:
- Steve Harney reminds REALTORS that the housing “recovery” is shaky in “Built on Jenga Blocks.”
- Stephen Fells offers ideas on how REALTORS can keep an eye on what the social sphere is saying about their business in “Why Every REALTOR Should Use Google Alerts.”
- Ron Hahn offers thoughts on how branding differentiation works in the real estate industry in “Interesting Branding Insights: Real Estate Companies Pay Attention!”
On Screen: Technology Trends (with Comments)
- Cisco says there will be more than 5 billion personal devices connected to wireless mobile networks. (Important trend considering under 50% of REALTORS reported using a smartphone last year).
- Comscore research shows that more than 178 million US citizens watched more than 33.2 billion videos in December 2009. (Amazing considering so few property listings have videos on them.)
- Nielsen research says that use of social networking online soared more than 82% last year over the year before. (Yet less than 35% of REALTORS had a social networking presence in 2009)
On Screen: Smart Ideas to Sell More
- Entrepreneurs should beware “vanity metrics” when measuring true performance, says the Harvard Business Review.
- Timeless ideas on innovation from Peter Drucker at Human Resources IQ’s website.
On Screen: But Wish it Were Not!
Here’s the MLS photo of the week from “Really Bad MLS Photos” group on Facebook:
Readers of this column long know of our contrarian opinion of most traditional real estate practices. None more frequently irks us than the idea that all problems in real estate can be solved by increasing the body count, er, recruiting. Even amidst the worst downturn in housing markets in two decades, brokers who hate recruiting still can’t stop doing it. Perhaps because as awful as it is, recruiting is still easier than focusing on productivity.
According to research by the National Association of REALTORS, buyers habits are changing when it comes to real estate. The report, recently released by NAR, asked more than 100,000 consumers to rank the usefulness of information sources to their efforts to learn more about the marketplace. The good news was that for the first time in years, the real estate agent edged-out the internet for top-spot as “very useful” (81% vs 77%). The bad news is that, by a factor of 4, most buyers think open houses suck.
Why is it that some things just won’t go change? There, on my doorstep, was a reminder that some companies still don’t get it. Nearly two pounds of absurdity, neatly wrapped in a plastic bag, and personally delivered to to my front porch, was a reminder that the more things change, the more some things stay the same. Absurd, when you think of it: Who uses the Yellow Pages these days?
For some time now, I’ve been asking myself if I’d missed the point about Twitter. Give it some time, I told myself. Sometimes these new technologies just need to shake themselves out. Originally, Motorola shelved the mouse as an input device, only to have someone dust it off years later and make it the tool of choice for personal computers. So I gave Twitter a chance. I tried it myself, and even started to “follow” some people online. Alas, with the release of a new study, I now know that I should have stuck with my initial reaction. Twitter is really dumb.
Yesterday found me on the 15th floor of the New York Times building in Manhattan, part of a trio of industry thinkers including Mike Staver and Steve Harney. Joining us for three hours of ”ask anything” discussion were some of the city’s finest brokers and managers. The host, Leading Real Estate Companies of the World, had brought us together for a second time (the first in Phoenix) in a brainstorming session that had audience and panel each doing equal work. And unlike one of the usual presentations you might attend, the learning flowed both ways, from industry experts both on stage and in the audience. And what learning it was!
“Reports of my death are greatly exaggerated,” So quipped Mark Twain after hearing his demise had been published in the New York Times. The same might be said today about the real estate industry. A lot of hullabaloo has been making its way through the web these days – the end of brands, numbered days for independent agents, consumers ready to do it on their own. Trouble is, it’s mostly punditry that supports these assertions. Certainly, real estate brokerage is under a lot of pressure to produce profits, cut costs and improve customer satisfaction these days. Even more likely is the potential for the industry to further downsize, eliminate waste and fracture away from grossly inefficient organizational structures and innovative models. But dead? Methinks some people doth protest too much.
Peter Drucker noted that when the general perception of a situation switches from “the glass is half full” to the “glass is half-empty,” major innovative opportunities were possible. The change in perception usually starts with the consumer, not the industry. It rarely reflects a real change in the facts, more than what the facts have come to mean to the consumers. For example, today represents the best time in fifty years to purchase a home. The stars are perfectly aligned to purchase low, borrow low and maintain low monthly costs. Most consumers would be long-term winners with a real estate purchase today. Yet the perception of real estate in general has become “half empty” in the minds of both buyers and sellers. Consumers no longer associate real estate with happy thoughts, even if they recognize it as a sound financial investment. That perception change is profound. And it’s keeping them on the sidelines. What can the real estate industry do, then, when even if we lead the consumer to half-empty glasses of water, we cannot make them drink?
Read more…
Fans of Spencer Johnson’s book will recognize the theme in today’s column: Something has definitely moved in today’s real estate industry. For decades, the industry built by Baby Boomers for Baby Boomers has essentially run the same race through the maze, finding the cheese almost every time. Periodically, the cheese was moved or a wrong turn was taken, but never very far and never a dead end. Usually, within months, the industry figured out how to navigate new turns and once fattened themselves again on the rediscovered cheese. Yet could a recession have pose a different problem to this “re-routing strategy” for managing change?
What happens to an industry when it isn’t just the cheese that has been moved but the entire maze?
Real estate is a tricky business. At some point, you’d expect things to “mean” what they say. Yet we’re an industry that can’t even decide what exactly constitutes a “bedroom.” In some markets, it’s a broom closet; others extend the definition to unfinished attics. Of course, small dens and breakfast nooks in big-city condos qualify as bedrooms as long as a curtain divides them from the next room. Funny stuff, but it gets more serious when you try to apply these definitions to market data. If we can’t decide what certain market data means, how can we plan a business strategy around it? When current listing prices are sketchy, foreclosures skew sold data and “for sale by owner” inventory makes it impossible to determine meaningful absorption rates, wouldn’t it be nice if we could just pin down the meaning of something simple – like “Days on Market”?
Ironically, even that market metric is sorely misunderstood.
Recently we pointed out that the next generation of REALTORS will come from non-traditional sources. As brokers focus more on productivity than body-count, and the recession will ultimately teach them this business lesson. A more rational, performance-based method of building real estate companies will emerge. Traditional “Ponzi” schemes of filling the bottom with as many people with a license-and-heartbeat will fade away. It will become less frequent, not more, than inexperienced sales people will be thrown into the office mix. This positive lesson, while long awaited, will help brokers reconfigure their strategies for the future. But what about salespeople? How will they know whether it’s right for them to join a particular company? Let’s look at the other side of the recruiting question for a change.
In the future, real estate salespeople will still be independent contractors; As long as brokers and agents can milk the tax loophole, they will. Whether or not that has any impact on performance, however, is a non-argument. The best agents in the business are the best, not because of their tax status, but because they surround themselves with the right productivity environment. Entrepreneurial salespeople know that the key to their success is to make the right choice of brokerage. They want to join companies that balance teamwork structures with ample independent creativity to unleash their knowledge as workers.
Future agents will join companies who produce; not necessarily those with the most stuff. Read more…
Everyone knows about the 90/10 rule: 90% of the business is done by about 10% of REALTORS. Translated to a consumer experience, this means that most buyers and sellers have about a 1-in-10 chance of getting the “best performing” agent to sell their home or represent them in a purchase. Even a generous assessment of the business – quartiled for the top 25% of agents who generate more than $200,000 in commissions annually – leave the underperforming-bottom 75% of the business to muck up the works. And while banks, lenders, Fannie, Freddie, Frank and Dodd all share some blame for causing the current crisis, could it be that the “other” broken real estate market is the soft-underbelly of the brokerage industry itself?
Do we really need to answer that?
